Do Double-Edged Swords Cut Both Ways? The Role of Technology Innovation and Resource Consumption in Environmental Regulation and Economic Performance

Qian Zhou, Meng Shi, Qi Huang and Tao Shi
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Qian Zhou: Economics School, Zhongnan University of Economics and Law, Nanhu Avenue 182, Wuhan 430073, China
Meng Shi: Department of International Cooperation, China National Academy of Governance, Dayouzhuang 100, Beijing 100091, China
Qi Huang: Zhengzhou Central Sub-Branch of People’s Bank of China, Shangwu Road 20, Zhengzhou 450000, China
Tao Shi: Department of International Cooperation, China National Academy of Governance, Dayouzhuang 100, Beijing 100091, China

IJERPH, 2021, vol. 18, issue 24, 1-21

Abstract: The Guangdong–Hong Kong–Macao Greater Bay Area (GBA) is one of the significant regions with the strongest economic vitality in China. This study focuses on environmental regulation in the eleven Greater Bay Area cities to explore the relationship between it and economic performance for the period 2000–2016. In doing so, we employ spatial panel models (including the spatial instrumental variable method) to investigate the nonlinear relationship between economic growth and environmental regulation. We confirm the existence of a U-shaped relationship between economic growth and environmental regulation in the Greater Bay Area. In the first half of the inverted U shape, the higher the economic development level, the stronger the environmental regulation strength; however, the latter begins to decrease after the peak point. The doubled-edged sword does not cut both ways. This paper verifies that technology innovation and resource consumption are two important mechanisms. Further, we find that both economic growth and environmental regulation have negative spatial externalities; innovation has a positive impact on the environmental regulation of the local city as well as surrounding cities, while resource consumption is on the contrary. In conclusion, this paper provides policy recommendations to further promote economic growth and environmental technologies, and to enhance energy efficiency in GBA.

Keywords: environmental regulation; economic performance; technology innovation effect; resource consumption effect; spatial instrumental variable panel models (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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